HomeMy WebLinkAbout673ORDINANCE NO. 6 7 3
AN ORDINANCE AUTHORIZING THE LEASING BY THE
CITY OF BATESVILLE, ARKANSAS TO BATESVILLE
RUBBER COMPANY OF THE LANDS, BUILDINGS, IMPROVE-
MENTS, MACHINERY AND EQUIPMENT DESCRIBED IN THE
FORM. OF LEASE AGREEMENT APPROVED BY THIS ORDINANCE;
A'(1)THORIZING THE EXECUTION OF A LEASE AGREEMENT
DY' "J HE MAYOR AND CITY CLERK FOR AND ON BEHALF
(:RL 'I'z E CITY IN THE FORM APPROVED BY THIS ORDINANCE,
PRESCE:11BING OTHER MATTERS PERTAINING THERETO AND
DECLARING AN EMERGENCY.
BE IT ORDAINED by the City Council of the City of
Batesville, Arkansas;
Section 1. That the City of Batesville, Arkansas lease
to Batesville Rubber Company, an Arkansas corporation, the lands,
buildings, improvements, machinery and equipment described in
the form of lease agreement hereinafter authorized for the
rentals and pursuant to the terms and conditions, and with
the option to purchase, set out fully in the form of lease agree-
ment hereinafter authorized. That there be and there is hereby
authorized the execution of the Lease Agreement by and between
the City of Batesville, Arkansas and Batesville Rubber Company,
an Arkansas corporation, in the form and with the contents
hereinafter set forth and the Mayor and City Clerk be, and they
are hereby, authorized and directed to execute, acknowledge
and deliver said Lease Agreement for and on behalf of the City.
The form and contents of said Lease Agreement, made a part hereof,
are as follows:
LEASE AGREEMENT
THIS AGREEMENT made and entered into this day of
1960, by and between the CITY OF BATESVILLF4
ARKANSAS (hereinafter referred to as "Lessor") and BATESVILLE
RUBBER COMPANY, an Arkansas corporation, with its principal offices
in Batesville, A:olransas (hereinafter referred to as "Lessee"),
W I T N E S S E T H:
WHEPEAS, the Lessor is a duly existing municipality, a
city of the fir^s;, class, with full power and authority under the
laws of the State of Arkansas to enter into all of the terms and
conditions of this agreement, and the Lessor, acting by and through
its duly authorized Mayor and City Clerk, is authorized to enter
into this agreement in furtherance of the best interests of the
citizens of Lessor and Independence County, Arkansas, to provide
employment for considerable numbers of persons and to add to the
welfare and prosperity of said persons, of Lessor and of
Independence County; and
WHEREAS, the Lessor has acqui-red the fee simple title
to certain real estate in Independence County, Arkansas, described
in Section 201 (a) hereof, (hereinafter sometimes referred to as
the "site"); and
WHEREAS, Lessor proposes to construct factory buildings
and manufacturing facilities thereon and purchase and install
necessary machinery and equipment thereon (which, together with
the site, will be hereinafter sometimes referred to as the
"project"); and
WHEREAS, the Lessee is willing to lease said project
under the terms and conditions set forth in this agreement; and
WHEREAS, the Lessee is a duly organized and existing
corporation under the laws of the State of Arkansas and is a wholly
owned subsidiary of Seiberling Rubber Company, a Delaware corpora-
tion, with its principal offices in Barberton, Ohio (hereinafter
referred to as "Seiberling"), and Seiberling has agreed to and will
by a separate instrument executed contemporaneously herewith
unconditionally guarantee the performance by the Lessee of all its
covenants and obligations in this Lease Agreement set forth and
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Seiberling has affirmatively so represented to Lessor; and
WHEREAS, the Lessee is not prohibited under the terms of
any outstanding Trust Indentures, Deeds of Trust, Mortgages or other
instruments from entering into the terms of this Lease Agreement
and discharging all covenants, provisions and obligations on the
part of Lessee hereunder, and hereby affirmatively so represents
to Lessor; and
WHEREAS, Seiberling is not prohibited under the terms of
any outstanding Trust Indentures, Deeds of Trust, Mortgages or
other instruments from unconditionally guaranteeing the performance
of all of the covenants and obligations of Lessee in this Lease
Agreement set forth and by the execution of said separate instru-
ment embodying said unconditional guarantee has affirmatively so
represented to Lessor; and
WHEREAS, Independence County, Arkansas is issuing
General Obligation Industrial Development Bonds under the provisions
of Amendment No. 49 to the Constitution of the State of Arkansas
in the unconverted principal amount of $500,000, dated March 1,
1960, (which bonds of Independence County will hereinafter some-
times be referred to as the "Amendment No. 49 Bonds" and the holders
of said bonds will hereinafter sometimes be referred to as the
"Amendment No. 49 Bondholders"), and is making all of the proceeds
of the sale thereof available for the purpose of providing for
part of the project costs (as defined in Section 108), and Lessor
is issuing Industrial Development Revenue Bonds under the pro-
visions of Act No. 9 of the First Extraordinary Session of the
Sixty -Second General Assembly of the State of Arkansas, approved
January 21, 1960, in the unconverted principal amount of $900,000,
dated March 1, 1960, (which bonds will hereinafter sometimes be
referred to as the "Act No. 9 Bonds" and the holders of said bonds
will be hereinafter sometimes referred to as the "Act No. 9 Bond-
holders") for the purpose of providing for that part of the cost
of the project costs not covered by the said Amendment No. 49 Bonds
and not paid for by Lessee, it being understood that Amendment No.
49 Bonds and Act No. 9 Bonds shall mean and include only said bonds,
the proceeds of which are used solely for the project costs; and
WHEREAS, Independence County is levying and collecting
a continuing annual tax of five (5) mills, the proceeds of which
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tax will be applied to the payment at maturity and to the redemption
prior to maturity of the said Amendment No. 49 Bonds, and all
revenues derived from the Project, including particularly the
lease rentals to be paid by the Lessee hereunder, will be pledged
to the pairne:it of the principal of, interest on and paying agent's
fees in connection with the said Act No. 9 Bonds of Lessor and to
the creation and maintenance of a reserve for contingencies,
with the surplus lease rentals, as defined in the Trust Indenture
securing the Act No. 9 Bonds, to be applied to the redemption of
the said Amendment No. 49 Bonds of Independence County, Arkansas,
until said Amendment No. 49 Bonds are fully paid and discharged
or adequate provision made therefor; and
WHEREAS, Independence County, Arkansas is herein made a
third party beneficiary under and in accordance with the provisions
of Section 1611 of this Lease Agreement; and
WHEREAS, The First, NatuJ.cn.:._ Dank -4n Lith le Rock, Little
Rock, Arkansas, will be the original Trustee for the holders of
the Amendment No. 49 Bonds and the same Bank will be the original
Trustee for the holders of the Act No. 9 Bonds, it being understood
that successor trustees may be named in the manner provided in the
Trust Indenture securing the Act No. 9 Bonds and in the manner
provided in the County Court Order securing the Amendment No. 49
Bonds, which successor trustees may be the same institution or
may be different institutions; and
WHEREAS the original and successor trustees for the
holders of the Amendment No. 49 Bonds will be referred to herein as
"Trustee for the Amendment No. 49 Bondholders" and the original
and successor trustees for the holders of the Act No. 9 Bonds will
be referred to herein as "Trustee for the Act No. 9 Bondholders",
it being provided that the original and successor trustees for
the Amendment No. 49 Bondholders and for the Act No, 9 Bondholders
shall be banks or trust companies having capital and surplus of
not less than $3,000,000.
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NOW, THEREFORE, for good and valuable consideration,
receipt of which is hereby acknowledged by the parties hereto, and
in consideration of the mutual benefits and covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
CONSTRUCTION
Section 101. It is agreed that the Lessor will construct
and equip t1ze factory building and permanent improvements on the
site leased hereby, in accordance with plans and specifications
approved by the Lessor and the Lessee, suitable for the manufactur-
ing activities whf-ch Lessee shall desire to carry on. Lessor
hereby appoints and designates Lessee as agent of Lessor for
the design and construction of said factory building and permanent
improvements and for the acquisition and installation of equipment
and machinery therein. In its capaci;-y as such agent, Lessee
shall have the full responsibility for said design, construction
and supervision of construction and the acquisition and installation
of machinery and equipment and Seiberling's and Lessee's time,
costs and expenses directly attributable to said design, con-
struction and supervision work may be included as part of the
construction costs as hereinafter determined. The Lessor agrees
that, by and through Lessee, as agent, it will enter into necessary
contracts with architects, engineers and contractors to accomplish
the design and construction of the building and improvements and
the purchase and installation of machinery and equipment in accord-
ance with the recommendations of Lessee.
It is understood and agreed by the parties hereto that
the plans and specifications referred to above are being prepared
by Ginocchio-Cromwell & Associates, Architects, 416 Center, Little
Rock, Arkansas, and that said firm or a representative thereof
will supervise or approve the construction of the factory buildings
and permanent improvements and the acquisition and installation of
Lessor's machinery, equipment and fixtures (hereinafter defined
in Section 201 (c) and that Lessor has designated Ginocchio-
.r
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Cromwell & Associates as its duly authorized agent with full
authority to act for and on Lessor's behalf with regard to any and
all required approvals, consents and/or authorizations of Lessor
as to the plans and specifications, any changes therein or extras
or additions thereto, the construction of the factory buildings
and permanent improvements, the acquisition and installation of
Lessor's machinery, equipment and fixtures, and certain disburse-
ments from the Construction Fund or Funds into which the proceeds
of the Act No. 9 Bonds and Amendment No. 49 Bonds are deposited
as specified in Section 602 of the Trust Indenture securing the
Act No. 9 Bonds and Section 13 of the County Court Order securing
the Amendment No. 49 Bonds.
Section 102. The Lessee shall see that, pursuant to the
General Construction Contract, and as a part of the construction
cost of the Project, there is furnished and in full force and
effect at all times during said construction, general accident
and public liability insurance, workmen's compensation, builder's
risk and a performance and payment bond in an adequate amount,
which insurance and bond shall contain a clause naming the Lessor,
Lessee and Trustee for the Act No. 9 Bondholders as insureds as
their interests may appear, except in the case of the general
accident and public liability insurance the Lessor need not be
included, and any monies recovered by the Lessor, Lessee or the
Trustee for the Act No. 9 Bondholders shall be deposited in the
Construction Fund established by the Trust Indenture securing the
Act No. 9 Bonds and disbursed therefrom in accordance with the pro-
visions of said Trust Indenture governing disbursements from the
said Construction Fund.
From and after the time of the issuance and delivery of
the Act No. 9 Bonds and the Amendment No. 49 Bonds, the insurance
and performance and payment bond referred to in this section shall
be subject to the approval, as to amounts and companies, of the
Trustee for the Act No. 9 Bondholders, provided, however, such
approval shall not be unreasonably withheld.
Section 103. The Project shall be completed free of any
violation of any state or local laws, ordinances or regulations
applicable thereto. The Lessor shall deliver to the Lessee at the
time of the taking of possession by it hereunder, certificates, if
any are necessary, from all appropriate authorities authorizing
such occupancy for the purposes herein contemplated. The Project
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shall be constructed in a good and workmanlike manner and of first
class materials.
Section 104. Prior to or simultaneously with the execution
and delivery of this Lease Agreement, the Lessor shall furnish to
the Lessee proof of ownership of the site and in this regard the
Lessor covenants that it has fee simple title to said site and
that it will ever defend the said fee simple title and its right
to lease the leased premises.
Sectiorn 105. It is agreed, and Lessee covenants, that
Lessee, as agent of Lessor for the design, construction, acquisition
and installation work, will use its best efforts to take or cause
to be taken the necessary steps to complete a manufacturing building
and improvements and installation of equipment and machinery therein
suitable for the manufacturing operations to be conducted by the
Lessee, so that the construction cost (as defined in Section 106)
shall not exceed $1,300,000, provided, however, Lessee in any
event agrees that the manufacturing building and improvements shall
be constructed and the necessary equipment and machinery installed
so as to have a completed unit suitable for the manufacturing
operations to be conducted by Lessee and that excess construction
cost (over and above said $1,300,000), if any, shall be paid by
Lessee. With regard thereto it is contemplated that if there be
excess construction cost it will be in connection with the purchase
and installation of machinery and equipment and Lessee may furnish
at its own cost and expense the additional machinery and equipment
necessary to complete the Project and if it does so such machinery
and equipment shall not become the property of Lessor.
Section 106. "Construction Cost" as that term is used in
this Lease Agreement shall be construed to mean all costs and
expenses of every nature incurred in designing and constructing
the factory building, improvements, structures and facilities on
the site, purchasing and installing Lessor's machinery, equipment
and fixtures, expenses incurred by Lessor and by Independence County
in connection with the issuance of Act No. 9 bonds and the
Amendment No. 49 bonds not to exceed the amount of $15,000 (as
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described in (f) below) and all expenses and costs of every nature
necessarily incidental thereto (except Lessor's expenses and costs
set forth in Section 107). Construction cost shall include, but
shall not necessarily be limited to, the following:
(a) The amount paid to contractors and suppliers in
connection with the construction of the
buildings and improvements;
(b) The amount paid to contractors and suppliers
for all extras, additions or changes in the
original plans and specifications;
(c) The aggregate amount expended in the purchase
and installation of Lessor's machinery, equip-
ment and fixtures;
(d) The fees and expenses of architects and engi-
neers, and the fees and expenses of Seiberling
and of Lessee as agent for Lessor in the
design, construction and supervision;
(e) The cost of any policy or policies of title
insurance on the site, if requested by Lessee;
(f) The cost and expenses incurred by Lessor and
by Independence County in issuing the Act No.
9 Bonds and the Amendment No. 49 Bonds, in-
cluding, without limitation, Trustee's authenti-
cating fees, bond printing costs, legal fees,
the expenses of the special elections and all
other expenses of whatever nature incurred by
Lessor and Independence County in issuing and
delivering the bonds, but not to exceed the
total sum of $15,000;
(g) The cost of all utility facilities on the
site; and
(h) Such other and additional fees, costs, expenses
and outlays of whatever nature as may from time
to time be agreed upon by Lessor and Lessee as
constituting part of the construction costs.
Section 107. Construction cost, as that term is used
in this Lease Agreement, shall not include the following expenses
and costs incurred in connection with the project:
(a) The cost of acquiring the site and all costs
in connection with drilling existing wells
on the site;
(b) That portion„ if any, of the expenses incurred
by Lessor and Independence County in connection
with the issuance of the Act No. 9 Bonds and
the Amendment No. 49 Bonds (described in Section
106, sub -paragraph (f) which exceeds $15,000);
(c) The expense of furnishing utility lines and
facilities to the boundary of the site;
(d) The cost of razing and demolishing existing
structures on the site prior to the construction
of the factory buildings and improvements on
the site; and
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(e) The amount necessary to capitalize interest
on the Amendment No. 49 Bonds and the Act
No. 9 Bonds from the date of their issuance
until the date of the commencement of the
basic annual rent as specified in Section 203
of this Lease Agreement.
The above described expenses and costs (that is, those
expenses set forth in sub -paragraphs (a) to (e), inclusive above)
will be hereinafter referred to as "Lessor's expenses and costs".
With regard to (c) above, Lessee agrees that Lessor shall have
the right to authorize other persons, firms and corporations to
connect to and use the said utility lines and facilities that
are to be furnished by Lessor to the boundary of the site, pro-
vided that in the case of each such connection the utility involved
shall determine and advise the parties hereto that such connection
will not impair the service to Lessee.
Section 108. It is understood that, subject to the limi-
tations in the proceedings authorizing the Amendment No. 49 Bonds
of Independence County and the Act No. 9 Bonds of Lessor, said
limitations being not to exceed $500,000 in unconverted principal
amount of Amendment No. 49 Bonds and $1,000,000 in unconverted
principal amount of Act No. 9 Bonds, there will be initially issued
bonds in the aggregate principal amount necessary to pay $1,300,000
of the construction cost (as defined in Section 106 of this Lease
Agreement), and the full amount of Lessor's expenses and costs
as defined above in Section 107(x) to (e), inclusive, it being
understood that the Lessee is responsible for the construction
cost in excess of $1,300,000 as specified in Section 105. Since
the total unconverted principal amount of the Act No. 9 Bonds
being initially issued 1s less than the total authorized unconverted
principal amount, as set forth above, additional Act No. 9 Bonds
up to the maximum authorized unconverted amount may be subsequently
issued for the purpose of constructing additional improvements,
extensions and betterments to the project, or purchasing and
installing additional machinery, equipment and fixtures. In the
event of the issuance of any such additional bonds, a supplemental
agreement shall be executed by the parties specifying the additional
basic annual rental that shall be paid by Lessee because of such
additional construction work or such additional machinery, equip-
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ment and fixtures.
Whenever the term "project costs" is used in this Lease
Agreement it shall be construed to mean the "construction cost"
(as defined in Section 106) plus "Lessor's expenses and costs"
(as defined {.n Section 107).
Se^ti.cn 3.09. Lessee agrees that, upon completion of
the Project, it till enter into possession of and occupy the
lands and p-armanent improvements under and pursuant to the terms
of this Lease Agreement. During the term of this Lease Agreement
Lessee plans to use its best efforts to continuously conduct
manufacturing operations at as near maximum capacity as practicable
under all pertinent circumstances, but Lessee's judgment in this
respect shall be final and conclusive.
ARTICLE II
TERM OF LEASE AND RENTAL
Section 201. Lessor for and in consideration of the rents,
covenants and agreements herein reserved, mentioned and contained
on the part of Lessee to be paid, kept and performed, agrees to,
and does hereby, lease to Lessee, and the Lessee agrees to, and
does hereby, lease from Lessor, subject to the terms and conditions
in this Lease Agreement expressed, the following:
(a) A certain parcel of land situated in the County
of Independence and State of Arkansas, to -wit:
Part of the West Half (W2) of Section 10, Town-
ship 13 North, Range 6 West, described as follows:
Beginning at a point on West line of Highway 167,
said point being 106 feet West and 659 feet and
10 1/24' South from the Quarter Section corner be-
tween Sections 3 and 10, said point being also the
Southeast corner of the Felts Motel Tract, (see
deed recorded Book Y-6, page 381); thence North
84 degrees West along the South line of said tract
and extension thereof 861 feet to a point; thence
South 200 feet to a point; thence West 300 feet
to a point; thence South 200 feet to a point;
thence West 914 feet to a point on the East right-
of-way line of Missouri Pacific Railroad; thence
along said East right-of-way line, South 36 degrees
East 1300 feet and South 32 degrees East 1120 feet
to the West right-of-way line of Highway 167; thence
along said West right-of-way line North 32 degrees
East 900 feet; thence North 21 degrees East 300
feet; thence North 15 degrees East 483 feet; thence
North 800 feet to place of beginning, containing
56.2 acres, more or less.
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(b) Together with the factory buildings and other
buildings, permanent improvements, structures and facilities
erected or at any time hereafter erected thereon;
(c) Together with all machinery, equipment and fixtures
of every kind and natlare whatever purchased out of the proceeds of
the Act No. 9 and Amendment No. 49 Bonds, and placed on the site
or in said faltory building and other buildings, improvements,
structures and facilities erected on the site. In this regard,
all such machinery, equipment and fixtures of every kind and
nature therein shall be clearly marked by an appropriate tag or
other device reflecting ownership by the Lessor. The said
machinery, equipment and fixtures leased hereby shall be referred
to herein as "Lessor's machinery, equipment and fixtures"; and
(d) All improvements, accretions and appurtenances there-
unto belonging or in any wise appertaining.
All of the properties described and referred to above
in (a), (b), (c) and (d) shall be referred to herein as the
"leased premises".
TO HAVE AND TO HOLD the leased premises unto the Lessee
for the term of this lease as hereinafter set forth.
Section 202. The term of this lease shall commence on
the date hereof and shall end at midnight on the 31st day of
July, 1981.
Section 203. Commencing on the first day of August, 1961,
and continuing during the balance of the term of this lease, Lessee
covenants to pay Lessor, in the manner hereinafter provided in
Section 204 hereof, basic annual rent of $100,000. The said
basic annual rent for each yearly period shall be paid in approxi-
mately equal monthly installments in advance on the first business
day of each month.
The basic annual rent set forth above has been determined
by calculating the annual amount necessary to amortize over the
period of twenty (20) years $1,300,000 of construction cost, as
that term is defined in Section 106 of this Lease Agreement, at an
annual rate of interest of 4-,L%. The said basic annual rental shall
commence on the date specified above (being the first day of
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August, 1961), whether or not the project shall have been completed
by that date and whether or not the Lessee shall have taken
possession of the project on that date and shall continue for
the balance of the term, regardless of the completion date of the
project and regardless of the date Lessee shall take possession
thereof.
Section 204. The said basic annual rental shall be paid
to the Lessor by the Lessee remitting the same directly to the
Trustee for the Act No. 9 Bondholders, and the same shall be de-
posited by the Trustee for the Act No. 9 Bondholders to the account
of Lessor in a trust account designated "City of Batesville, Arkansas
Industrial Development Revenue Bond Fund -Batesville Rubber Company
Project" (herein called the "Act No. 9 Bond Fund"). Moneys in the
Act No. 9 Bond Fund shall be used solely as specified in the Trust
Indenture, hereinafter referred to as the "Trust Indenture", by
and between Lessor and the Trustee for the Act No. 9 Bondholders,
which Trust Indenture shall be approved by the Lessee. The sub-
stance of such provisions is that moneys in the Act No. 9 Bond
Fund shall be used solely for the payment of the principal of,
interest on and paying agent►s fees in connection with the Act
No. 9 Bonds, except any amounts therein (other than certain
moneys from condemnation as set forth in Sections 1001 and 1002
hereof and moneys from the exercise of an option to purchase as
set forth in Section 1609 hereof) over and above the following:
(a) The amount necessary to insure the prompt
payment of the principal of, interest on and paying agentis fees
in connection with said Act No. 9 Bonds;
(b) Any amount therein earmarked for bonds matured
and previously called for redemption;
(c) Any amount, if any, required for an expenditure
authorized by the Trust Indenture which is necessary to fully pro-
tect and realize the security of the bondholders;
(d) The amount necessary to establish and maintain
therein a reserve for contingencies in the amount of the maximum
amount that will become due in any year for principal and interest
payments on said Act No. 9 Bonds; and
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(e) The amounts received by the Trustee under and
pursuant to the provisions of Section 801(b) (3) hereof; shall be
transferred and paid by the Trustee for the Act No. 9 Bondholders
out of the Act No. 9 Bond Fund to the Trustee for the Amendment
No. 49 Bondholders for deposit by the latter in the Independence
County, Arkansas 1960 General Obligation Industrial Development
Bond Fund established by Section 6 of the County Court Order
securing the Amendment No. 49 Bonds. Such transfer shall be made
semi-annually on or before February 10 and August 10 of each year
and the Trustee for the Act No. 9 Bondholders shall require and
keep on record a receipt from the Trustee for the Amendment No. 49
Bondholders of the amount so transferred. Such transfers shall
continue until all of the principal of, interest on and other
charges in connection with all of said Amendment No. 49 Bonds are
paid in full, or adequate provision is made for such payment.
Thereafter, all basic rental payments received by the Trustee
for the Act No. 9 Bondholders pursuant to the provisions of
this section shall be placed in the Act No. 9 Bond Fund and,
as provided in said Trust Indenture, the amount therein in excess
of the amount necessary to insure the prompt payment of the
principal of, interest on and paying agent's fees in connection
with said Act No. 9 Bonds, and to establish and maintain the reserve
for contingencies in the required amount, shall be used to redeem
the Act No. 9 Bonds prior to maturity. The Trustee for the Act
No. 9 Bondholders shall furnish from time to time at the request
of Lessor, Lessee, Independence County, or the Trustee for the
Amendment No. 49 Bondholders an accounting of the moneys deposited
in the Act No. 9 Bond Fund, including, without limitation, the
application of said moneys, the balance therein, the principal
amount of Act No. 9 Bonds paid at maturity, the principal amount
of Act No. 9 Bonds redeemed prior to maturity and the principal
amount of bonds outstanding. Rental payments so remitted to the
Trustee for the Act No. 9 Bondholders shall constitute payment
to Lessor hereunder. After the principal of, interest on, paying
agent's fees and other charges of whatever nature in connection
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with all bonds issued for financing the Project (including
both Act No. 9 Bonds and Amendment No. 49 Bonds) have been fully
paid and discharged, all rental payments shall be paid to the Lessor
by the Lessee paying the same directly to First National Bank,
Batesville, Arkansas, for deposit in a Special Trustee Account
in said Bank pursuant to the provisions of an agreement between
Lessor and Independence County declaring their respective interests
in the Project and in this Lease Agreement, hereinafter referred
to and described.
Section 205. Lessee further covenants to pay, as
additional rent, all costs, expenses, liabilities, obligations
and other payments which Lessee in any of the provisions of this
Lease Agreement assumes or agrees to pay and in the event of any
failure by Lessee to pay any of the same, Lessor shall have all
the rights and remedies provided for in this Lease Agreement, or
at law or in equity in case of nonpayment of the basic annual
rent, subject to the provisions of Section 702 hereof. After the
Amendment No. 49 Bonds and the Act No. 9 Bonds have been issued
and the proceeds of the sale thereof have been deposited in the
Construction Funds specified in the Ordinance, Trust Indenture
and County Court Order, the basic annual rent and additional
rent shall be paid by Lessee without notice or demand and without
abatement, deduction, counterclaim, set-off or defense arising
from any circumstance whatsoever, whether now existing or hereafter
arising, including without limitation: (a) any prevention or
curtailment of or interference with any use of the leased premises
or any part thereof for any purpose as a result of any legal
requirements (except as otherwise provided in Article X in
connection with the taking of the property), or (b) any damage
to or destruction of the leased premises or any part thereof, or
(c) any default of Lessor under Article I or under any other
provision hereof. The foregoing obligation to pay basic annual
rent and additional rent shall cease in the event of a purchase
of the leased premises by Lessee pursuant to any option it may
have with Lessor pertaining to said purchase and the payment of
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the purchase price. Whenever the word "rents" or the word "rentals"
is used herein, it shall be construed to mean both the basic annual
rent and the additional rent.
ARTICLE III
QUIET ENJOYMENT AND POSSESSION
Section 301. The Lessor covenants that the Lessee, on
paying the rentals and performing the covenants and agreements here-
in on the Lessee's part to be performed, shall and may peaceably
and quietly have, hold and enjoy the said leased premises for the
term of this Lease Agreement and that the Lessor will defend the
Lessee's enjoyment and possession of said leased premises against
all parties.
ARTICLE IV
MAINTENANCE AND REPAIRS
Section 401 (a) All buildings, improvements, machinery
and equipment upon and in said leased premises shall be kept, both
outside and inside, in good and substantial order and repair by
the Lessee, at the Lessee's sole cost and expense, including, but
not limited to, all walls, roofs, floors, vaults, water and sewer
connections, window and other glass, plumbing, water, gas and
electric fixtures, pipe, wires and conduits, and all machinery,
fixtures and appurtenances in, on, or connected with, the leased
premises so that, at all times, the said buildings, improvements,
machinery and equipment shall be in good order, condition and re-
pair. Lessee's obligations set forth in this Section 401 (a)
shall be applicable to any buildings, improvements, machinery and
equipment subsequently constructed on or placed or installed in
the leased premises which by the terms hereof are property of the
Lessor.
(b) Throughout the term of this Lease Agreement, the
Lessee shall, in respect to the leased premises, at its own expense,
promptly observe and comply with all valid laws, orders, regula-
tions, rules, ordinances and requirements of the federal, state,
city and county governments, and of each of them, and of any and
all of its, or their, departments or bureaus. The Lessee shall
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pay all costs, expenses, claims, fines, penalties and damages that
may, in any manner, arise out of, or be imposed because of, the
failure of the Lessee to comply with this covenant.
(c) Anything in sub -section (b) to the contrary notwith-
standing, the Lessee shall not be deemed to have waived its rights
to protest, traverse or otherwise contest any such law, order, re-
gulation, rule, ordinance or requirement, and may defer compliance
until a final determination shall be had.
ARTICLE V
ALTERATIONS AND IMPROVEMENTS
Section 501. The Lessee shall have the right, at its
own expense, to make any and all alterations, additions, instal-
lations and other improvements to the leased premises as it shall
deem suitable for its business needs. Any alterations, additions,
installations or improvements which do not materially affect the
main structure of the building and permanent improvements, from the
standpoint of reducing its value or usability for the purpose of
conducting manufacturing operations, may be made without the con-
sent of the Lessor or the Trustee for the Act No. 9 Bondholders.
Any such alterations, additions, installations or improvements
which do so materially affect the main structure of the building
and permanent improvements must have the prior consent of the
Lessor and the Trustee for the Act No. 9 Bondholders, which
consents shall not be unreasonably withheld. With regard to such
consents, the Lessee shall submit to the Lessor and to the Trustee
for the Act No. 9 Bondholders, an explanation of any proposed
alterations, additions, installations and improvements for which
consent is required, in detail satisfactory to the Lessor and to
the Trustee for the Act No. 9 Bondholders and if approval or dis-
approval of the Lessor and the Trustee for the Act No. 9 Bondholders
is not received within thirty (30) days after such submission,
it shall be conclusively presumed that approval has been granted.
All permanent alterations, additions, installations and improve-
ments constructed or placed upon the leased premises by the Lessee
0
Page 16
hN
shall be and become the sole and absolute property of the Lessor,
(but this shall not include any of Lessee's machinery and equip-
ment, removable partitions and fixtures, and personal property).
Section 601.
ARTICLE VI
INSURANCE
(a) Lessee at its expense prior to or
simultaneously with the expiration of the insurance required by
Section 102 hereof and during the remainder of the term of this
Lease Agreement shall keep all buildings, improvements and Lessor's
machinery and equipment on the premises insured against loss or
damage by fire, with uniform standard extended coverage endorse-
ment covering wind or hail, storms, civil riot or commotion and
explosion, and aircraft, vehicles and smoke (except as limited
in the present uniform standard extended coverage endorsement),
in a good and responsible company or in companies approved by
the Trustee for the Act No. 9 Bondholders. The amount of in-
surance shall be not less than the full insurable value of the
property insured, or as Lessor, Lessee and the Trustee for the
Act No. 9 Bondholders may from time to time agree. All policies
issued and renewals thereof for all such insurance shall be in
the names of Lessor, Lessee and the Trustee for the Act No. 9
Bondholders as their interests may appear but proceeds in case
of loss shall be paid to the Trustee for the Act No. 9 Bondholders
and, by it, released to or on behalf of Lessee in discharge of
Lessee's obligations pursuant to the provisions of Article IX
hereof. It is understood that the provisions of this Article
VI apply only to the leased properties and do not apply to any
personal property placed by Lessee in or on the leased premises.
10
Page 17
The certificates of the insurer or insurers, as the case
may be, delivered to the Lessor and the Trustee for the Act No. 9
Bondholders shall be sufficient proof of Lessee's compliance with
this section, but the Lessor and the Trustee for the Act No. 9
Bondholders and their agents may inspect or obtain copies of said
policies at any time. Proceeds of insurance not released to or
on behalf of Lessee as required by Article IX hereof shall be de-
posited in the Act No. 9 Bond Fund, or, if at that time all out-
standing Act No. 9 and Amendment No. 49 Bonds have been fully paid
and discharged, or adequate provision made for their payment and
discharge, the said proceeds shall be deposited in the Special
Trustee Account pursuant to the agreement between Lessor and
Independence County, hereinbefore referred to and hereinafter
described.
(b) Throughout the term of this Lease Agreement, Lessee
shall provide and keep in force, for the benefit of Lessee and
Trustee for the Act No. 9 Bondholders general liability insurance
policies on standard Arkansas forms, protecting the parties with
policy limits of $200,000 bodily injury in respect to injuries to
any one person and $500,000 bodily injury in respect to any one
accident or disaster; $50,000 property damage in respect to damage
to the property of any one owner and $100,000 property damage in
respect to any one accident or disaster; and the said liability
policies shall cover the entire building and premises.
Section 602. In case Lessee neglects to insure and keep
insured the buildings and improvements and Lessor's machinery
and equipment on the premises as required by Section 601, Lessor
or the Trustee for the Act No. 9 Bondholders may at their election
Page 18
procure or renew such insurance and add the amount paid therefor to
the next installment of basic annual rent with interest at the rate
of six per cent (6%) per annum. It is expressly covenanted and
agreed that payment by the Lessor or the Trustee for the Act No. 9
Bondholders of any insurance premium shall not be deemed to waive,
or release, the default by the Lessee in the payment thereof, or
the right of the Lessor or the Trustee for the Act No. 9 Bondholders
to take such action as may be permissible hereunder as in the case
of default in the payment of rents. Any such payment by Lessor
or the Trustee for the Act No. 9 Bondholdeis, plus interest, shall
be treated as additional rent.
ARTICLE VII
DEFAULTS
Section 701. Upon the happening of any one or more of
the events, as set forth below, hereinafter sometimes referred to as
defaults, the Lessor shall have the right, at the option of the
Lessor, either to annul and terminate this Lease Agreement, upon
thirty (30) days' written notice to the Lessee, and thereupon re-
enter and take possession of the premises, or the right, upon
thirty (30) days' written notice to the Lessee, to re-enter and re -
let the said premises, from time to time, and such re-entry or re-
letting shall not discharge the Lessee from any liability or
obligations hereunder, except that net rents collected, as a result
of any re -letting, shall be a credit on the Lessee's liability
for rents under the terms of this Lease Agreement. Nothing in this
section shall be construed to require the Lessor to re-enter and
re -let in such event, and, subject in all cases to the giving of
thirty (30) days' written notice to the Lessee, nothing in this
section shall be construed to postpone the right of the Lessor to
sue for rents or pursue any remedy or remedies which may be
available at law or in equity, but on the contrary, both the
Lessor and the Trustee for the Act No. 9 Bondholders are hereby
given the right to sue therefor or pursue any such remedy or
remedies at any time after default, as defined in Section 702.
follows:
Page 19
Section 702. The defaults herein referred to are as
(a) Should Lessee fail to pay any one or more monthly
installments of rent, as and when the same become due, and such
defaul% should continue for fifteen (15) days after written demand
fov the payment thereof is made by the Lessor or Trustee for the
Act No. 9 Bondholders upon the Lessee;
(b) Should the Lessee be adjudicated a bankrupt;
(c) Should an assignment, for the benefit of creditors,
be made by the Lessee;
(d) Should there be appointed a receiver of all, or sub-
stantially all, of the Lessee's property and said receiver con-
tinues in possession thereof for ninety (90) days;
(e) Sh.ou'.d the Lessee, before the expiration of said
term, and wit0hout written consent of the Lessor, vacate the said
r::?emises or abandon the possession thereof;
(f) Should the Lessee violate any of the other terms,
conditions or covenants on the part of the Lessee herein contained,
:id fail to .remedy or to proceed with due diligence to remedy the
sane wlthjt,tj 4.-hirty (30) days after written notice given by the
Lessor or. Trustee for the Act No. 9 Bondholders to the Lessee
specifying the default or defaults.
Sect on '703. The failure of Lessor or Trustee for the Act
Ai. 9 Bundholders to insist upon the performance of any of the
conditions of this Lease Agreement, or to exercise any option
%erein conferred in any one or more instances, shall not be con-
strued as a waiver or relinquishment of the benefit in the future
ol' said conditions and options.
Section 704. Subject to the provisions of Section 701 and
702 hereof pertaining to written notice, in the event that the
.Lessee shall make default in the performance of any of the agree-
ments, conditions, covenants, or terms herein contained, other
than the payment of rent, the Lessor and the Trustee for the Act
No. 9 Bondholders may perform the same, for the account of the
Page 20
Lessee, and any amount paid, or any expense or liability incurred,
by the Lessor or the Trustee for the Act No. 9 Bondholders, in the
performance of the same, shall be deemed to be additional rent,
payable by the Lessee for the leased premises; and the same shall
be added to any basic annual rent then due, or thereafter falling
due, hereunder; and the Lessor and the Trustee for the Act No. 9
Bondholders and their representatives, shall have the right to
enter the said leased premises, for the purpose of correcting, or
remedying, such default, and to remain therein, until the same
:.hall have been corrected or remedied.
ARTICLE VIII
REMOVAL AND SUBSTITUTION OF MACHINERY AND
EQUIPMENT
Section 801. (a) All machinery and equipment, removable
partitions and fixtures, and personal property of the Lessee which
TJessee has at any time installed in or on the leased premises may
r removed by the Lessee at any time provided, however, the Lessee,
its own ;:.o.t, shall repair any damages to the leased premises
,:a.used by sunh removal.
(b) Lessee may, provided Lessee is not in default in the
raymen.of basic annual rent and additional rent, remove and sell
r• otherwise dispose of any of Lessors machinery and equipment
which is no longer used by the Lessee or in the opinion of Lessee
4.0 no longer useful to Lessee in its manufacturing operations con-
-.ucted on file leased premises (whether by reason of changed manu-
facturing processes, changed techniques, obsolescence, depreciation
or otherwise), subject, however, in all cases to the following:
(1) Lessee shall pay all the costs and expenses of any
such removal and shall immediately repair at its expense
all damage to the leased premises caused thereby;
`4' r
Page 21
(2) Lessee may replace any item of machinery or equip-
ment with machinery and equipment of the same or different
kind but of an equal or greater value in which event the
replacement machinery or equipment shall become the pro-
perty of Lessor and the machinery or equipment so removed
by Lessee shall become the property of Lessee and may be
sold or otherwise disposed of without accounting to Lessor
with respect thereto, provided, however, that within 30 days
after any such replacement, Lessee shall furnish to Lessor
and the Trustee for the Act No. 9 Bondholders a certificate
setting forth a description of such replacement.
(3) Lessee may sell or otherwise dispose of any of Lessor's
machinery or equipment without replacement, but prior to any
such sale or disposition shall furnish evidence satisfactory
to Lessor and the Trustee for the Act No. 9 Bondholders
that the sale or disposition is for a consideration repre-
senting the fair market value of such machinery or equip-
ment in the form of an offer to buy such machinery or
equipment from a third party, not regularly employed or
retained by or affiliated with Lessee, and, if requested
in writing by the Trustee for the Act No. 9 Bondholders
or Lessor within ten days after furnishing such evidence,
Lessee shall give Lessor thirty days within which to
locate a purchaser for said machinery or equipment at a
higher price and if such a purchaser is located the said
machinery or equipment shall be sold to said purchaser
in accordance with the direction of Lessor. Any con-
sideration received from such a sale or disposition shalt
be remitted to the Trustee for the Act No. 9 Bondholders
and deposited in the Act No. 9 Bond Fund for applica-
tion in accordance with the provisions governing ex-
penditures from the Act No. 9 Bond Fund. Lessee shall
receive credit on basic annual rental payments for any
such consideration received but the credit shall be applied
on the installments of basic annual rent in inverse numerical